Axa seeks three-year derogation on risk payments

Insurance group Axa has said it is prepared to enter the Irish health insurance market on condition that it will have an initial derogation from making risk equalisation payments.

In confidential correspondence sent by Axa to Bupa last Monday, the company said it would enter the market here on the basis that it would make these payments after an initial three years.

The correspondence, sent by a senior Axa executive in the UK to the Bupa group headquarters in London, said it was prepared to pay an appropriate market value for Bupa's standalone systems and processes. It also indicated that it wanted to acquire the staff and customers. It did not put a price on acquiring Bupa's business in Ireland, which has 450,000 subscribers.

Axa also signalled that its rates for subscribers would be "closer to the existing premia than the VHI alternative".

Meanwhile it has emerged that there are now three groups interested in taking over Bupa's business here. Yesterday it emerged that the Mount Carmel Medical Group had indicated its intention to make approaches for the business.

Government sources said it was aware of the interest of the Mount Carmel group but that it was not the so far unidentified Irish group that had approached Minister for Health Mary Harney regarding acquiring the Bupa operation.

The Mount Carmel group, formerly known as Harlequin, is controlled by Co Kildare businessman Jerry Conlan, a property developer. Last July the group bought Mount Carmel hospital in Churchtown, Dublin.

It also owns St Joseph's Hospital in Sligo and Aut Even Hospital in Kilkenny.

When asked yesterday whether it was interested in taking over Bupa's business, a spokesman said: "The Mount Carmel group would not rule it out."

Meanwhile Bupa Ireland yesterday denied again that it was in negotiations on a sale of its business. Chief executive Martin O'Rourke said: "To my knowledge there have been no offers and there are no talks with anybody in relation to the future of Bupa Ireland."

While no offers have been made by Axa and no talks are under way, the company has, in correspondence, expressed interest in taking over Bupa's operation here.

It is understood the issue was first mooted in a conversation between senior executives in the UK last October.

Last Monday a director of Axa in the UK wrote to Bupa group headquarters saying: "I fear our conversations have been somewhat in passing and as such I have failed to convey the depth of Axa UK's interest in working with you to find an approach in the best interest of Bupa while promoting competition in the Irish market." Axa said in the letter to Bupa that it had written to the Taoiseach Bertie Ahern and Ms Harney indicating that it was willing to enter the Irish market and that plans were at an advanced stage for a meeting to discuss a market entry strategy. A spokesman for Axa declined to comment on the correspondence.

Ms Harney has strongly backed the proposed takeover of Bupa's operation by Axa.

Meanwhile Bupa's position is that it has received mixed signals from the Government about its intentions to discuss changes to the risk equalisation structure, which the company maintains has forced it out of the Irish market.

The company is understood to have received a letter from the Government in December indicating it had made its final offer in relation to amending the risk equalisation structure.